The global car industry is in complete meltdown and the second largest durable good after houses is in a slump which is already surpassing the one it had in the 1974/74.

In the US General Motors and Chrysler are essentially bankrupt with only a government loan of $14 billion allowing these companies to continue. A deal has been carried out behind the outgoing and incoming administrations where workers have to accept cuts in wages and conditions and face layoffs. If the car companies cannot pay the loan back at the end of March the government has the option of buying them at a knock down price. This is almost certain to happen with US car sales in November down 40% from the previous year. Sales are likely to slump further in December and 2009 as people turn their back on new cars to hoard money for an uncertain future. The new democrat administration will be faced with throwing more money at the company to keep it afloat as it haemorrhages funds throughout 2009. A million jobs are linked to the US car industry and the social consequences are huge of letting this happen. People when hard up can run an old car for years and there is no likelihood of sales picking up in the near future. The only solution for the US government is to turn the US car and connected industries to public projects. To use the skills of engineers and designers in the industry to social use. There skills could be used to build a massive public transport system for the US. This would be a radical step but don’t bet on it not happening.

A similar situation is faced in Britain where the collapse of Land Rover/Jaguar – bought for £2 billion by the Indian company Tata using a bank loan faces closure. 115,000 jobs in the Midlands depend on the car industry and again the Brown government may be faced to go the way of the US. But given the already 26% fall in car sales in the UK in November aid will not bail out the car industry. Only a radical public transport plan can save it in the long run. Why not stop peoples’ livelihoods going to the wall but save so many special skills. Tata is facing economic problems in India and the loan of £2 billion is now worth just worth £1 billion – the current estimate of what Land Rover/Jaguar is valued at. Here in lies the dynamic of this recession – bankruptcy and failed business ventures losses are feeding back into the financial system

A similar situation is faced on mainland Europe where governments have moved slowly to fight the on coming depression.

The seriousness of the situation is shown where Toyota is set to report its first annual loss in seventy years as its sales decline globally. In China sales of cars are down 11% in November.

All this indicates the depth of the crisis that capitalism faces with a depression almost certain to occur. Emerging from it is a new form of State Capitalism. It gives socialists the opportunity of turning this new state capitalism into a full blown rationale society under the democratic control of the majority of the population.